The billionaire owner of Bhs today increased his provisional bid for Top Shop owner Arcadia to almost £775 million.

Philip Green said the possible 408p-a-share take-over offer was a final proposal to Arcadia's board.

Arcadia, which also owns Miss Selfridge and Wallis, rejected a 365p-a-share, or £690 million, approach by the entrepreneur earlier this month as being too cheap.

Including options which have been promised to senior management, today's deal would be worth £850 million.

The offer is dependent on Arcadia recommending the deal.

It is also dependent on certain agreements being entered into with Icelandic company Baugur, which owns 20 per cent of Arcadia.

This will include Mr Green buying Baugur's holding and then selling certain of the Arcadia assets to the Icelandic firm.

Under a deal Arcadia is expected to be broken up, with Baugur taking the trendy Top Shop, Top Man and Miss Selfridge brands and Mr Green holding the more mature Wallis, Dorothy Perkins and Burton chains.

The deal is also subject to finalising financing arrangements.

Arcadia said it was considering its response to this proposal. Shares in Arcadia soared 13 per cent to 388p in early trading following the announcement.

The group has seen its fortunes revive in recent months.

It has focused on key brands and improved its supply chain after offloading underperforming chains such as Warehouse, Principles, Racing Green and Hawkshead to a management buy-out team last year.

Earlier this summer, Arcadia brushed aside concerns about a downturn on the High Street to post strong growth across its store chains.

For Mr Green, winning Arcadia would allow him to do what he does best - buying firms and breaking them up. Breaking up and selling off the Sears empire in the Nineties made him millions.